What carmakers learned from consumers about branding
Want to know how to spend too much for an Isuzu SUV in one easy lesson? Trot down and buy one from your local Honda dealer.
Honda buys Rodeo SUVs from Isuzu and "rebadges" them as Honda Passports. The trusted name can add $2,000 or more to the sticker price.
Consumers gravitate to certain labels. And there are plenty of people who will pay a premium for a label perceived as more trustworthy.
"What people are buying is membership in an exclusive club," says Ron Pinelli, president of Auto Data in Woodcliff Lake, N.J.
Consider Harley-Davidson motorcycles, which sell for a 50 percent premium for "authenticity" over similar Japanese bikes, even though the imports often have higher quality, he says.
Other things consumers may pay extra for are better service, longer warranties, free loaner cars and shuttles, and no-hassle dealerships, as in the Lexus "experience," says Mr. Pinelli.
The auto industry has a long and fairly grim history of what enthusiasts deride as "badge engineering." The 1970s and early '80s were the "very dark" days, says Pinelli, when luxury brands like Cadillac and Lincoln lost all meaning, selling rebadged Chevrolets and Fords with little distinction.
"Consumers can pretty much see through that," says Mr. Pinelli. Compared to GM's heyday in the 1950s, when cars shared basic architecture, but differed in engines and looks, "there wasn't enough substance to the differences," he says. Those cars in the '70s and '80s "were acts of desperation" by automakers who had nothing else to offer, he adds.
The practice, however, hurt automakers and their reputations more than it hurt consumers. GM in particular ended up with homogenous cars that compromised every division's name, Pinelli says.
Most customers quit caring whether they bought a Pontiac or a Buick, for example, while the dealer's location and pricing became more important.
"You can't really fool the public anymore," at least with something as expensive and well documented as automobiles, he says. "If you stick an exclusive label on a cheap product, there really isn't a lot of value to that."
While examples of identical cars that wear different brands aren't likely to disappear soon, the practice is changing to something more subtle: sharing parts. Mergers of auto giants like Daimler-Benz and Chrysler have fueled this trend. Advances in design and engineering have made it easier to build cars that appear different on the outside even though they often contain the same parts and are built on the same assembly lines.
Consumers don't want cars that look alike, says Art Spinella, president of CNW Marketing Research in Bandon, Ore. But they don't really care what's underneath as long as it works.
So a new type of platform - more an engineering concept and manufacturing standard than a steel box - is emerging.
The best examples come from Toyota and Volkswagen. The Toyota Camry's platform can be found not only in the Lexus ES300 sedan, but also the Lexus RX300 sport utility vehicle and the Toyota Sienna minivan. Consumers have no reason to object that their minivan shares the Camry's reliable engine, or that their sport-utility vehicle rides as smoothly as a Camry on the highway.
And VW's hot-selling New Beetle, Jetta, and Audi TT are only variations on the popular VW Golf platform.
Such progress is beneficial to consumers, because manufacturers can build more types of cars at a lower cost -and charge lower prices, says Pinelli. Sharing expensive components like engines may even help keep repair costs down and make cars more reliable.
The end result is more-distinct products that may keep consumers coming back for more.
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